do not buy our stock of volatility is scary. there you go. >> tesla gets testy. shocking analysts and investors refusing to answer questions on model reproductions and cash burn. telling traders to sell. the fed adding the word symmetric to outlook. questioning the trade. let's get ready to rumble. the u.s. trade superstar delegation kicks off in china. hopes are dim. david: welcome to "bloomberg daybreak," i'm david westin with alix steel. it is my son's birthday today. alix: really? david palmer, happy birthday. david: meanwhile, elon musk. alix: terrified. we have to talk about that. in the markets, digesting that crazy tesla call. we will talk about that.

up by five points. amazingly, stronger. the word, symmetric, trumping any sort of weaker inflation in europe as well as the u.k. 1%, 119lar up 2/10 of is how we print. by the bond. that is how the story goes. plattner, re-rating in the five 30's and the 10. crude flat on the day. time for the first take. we're joined by bloomberg intelligence chief equity strategist and also the global macro squad. here it isthe fed. inflation on a 12 month bis expected to run the committee symmetric 2% objective over median term. risk to outlook or balanced. market reaction, the steepener in the 5/30, backing off that

level. is that the correct trade? >> for the short-term, probably not. supply will come in on the short end from the treasury, keeping the curve on the flat side going through the rest of this year. as the treasury continues to add supply as the fed tapers, the correct trade but that is more of a 2019 story. >> the markets seem to interpret that statement as more dovish. >> i think frankly the market is captivated by what is happening in earnings. reports more so than the fed. with respect to the fed, they're worried about inflation. hotter let inflation go at the same time when margins could come under pressure because of inflation pressures -- that depletes outlook for earnings. that is what we have seen through the earnings season. earnings are strong in the short run. analysts are marking down expectations for future

earnings. inflation plays a part of that story. to the extent the fed will let in flesh and run -- inflation run hotter in the short run, the market is nervous. david: you focus on the inflation question. what about the growth question? they tone back language. might the market be worried about that? >> that is part. absolutely. the longer-term outlook, contending with inflation pressure in the short run -- we're not seeing topline growth acceleration that could overwhelm inflation pressure. the result is longer-term earning expectations are not moving higher. they are moving in the wrong direction. alix: the line we are talking about his economic outlook strengthening -- it has. first quarter phenomenon necessarily, not completely rolling over, their data dependent? >> the statement became obsolete. they didn't remove it because they were dovish on economic growth -- initially that is

where the markets read it. bonds, stocks rally, the dollar tumbled. of it, morea hold of a fundamental outlook came into play. economists hit me up saying, this is a fed really confident. the markets are not seeing this in the right light. when i thought about it, he was correct. the markets recovered. the dollar recovered. the markets fell off, bonds selloff. inflation.rice pull crude is ratcheting up. if you match crude against five-year five-year break against even inflation rate, they are almost married. you are looking at a two and a quarter percentage above the fed target within reason. that is that the markets worried. david: second story in beijing. trade negotiations. the chinese corner, one person. let's talk about the u.s. corner. six people, led by steve

mnuchin, the secretary, wilbur ross. robert lighthizer is a negotiator, peter navarro, a former governor of iowa, and larry kudlow. six versus one. is this the way negotiations work? we are up. [laughter] i kind of like china's odds. parade are sending this if you will, to try to convince the president and the vice president -- this is a really big deal. they will come away with next to nothing. the chinese press have been given a gag order to take what the national news service as -- do not interpret, do not say a word. -- say it andy, z do not add a period. david: maybe telegraphing already, the chinese says they

will hang tough. i amt lighthizer says, always hoping but not always hopeful. it is a big challenge. there's a different system over there. it is worked very well for the chinese. that is not real brave talk out of our side. >> that is being reflected in markets at large. this is a weak correction, 10% so far. we should have dug our way out of that correction by now, if historical standards apply. we cannot. we have a limited risk tolerance on the investment community, not just earnings, the geopolitical situation. this uncertainty adding to a lack of risk tolerance in the broader markets. not a lot of hope suggesting anything will come out of this. as a natural optimist, that leaves us room for upside. [laughter] maybe we will get something out of this. that is the best i can do. alix: maybe the same can be said for tesla. the third story.

the topic of the day. elon musk going off on investors, on analysts. here is what he had to say. >> i think that ifeople are concerned aboutolatity they should not by our stock. i'm not here to convince you to buy stock. do not buy it if volatility is scary. there you go. ceo: have you ever heard a on a call say sell my stock if you want answers? >> i'm not sure i have. this is another conference call gone wrong. this is important. tesla is not a lone wolf. this is unique. ago.back to one week another conference call went wrong. these are numbers and everybody is happy about the numbers and they get on the conference call you hear from the ceo and they are not happy. that is a signal of sentiment right now. we need more. markets want more.

they want more optimism out of ceos. more assurance, they are not getting it. alix: you have a phase? david: the terrible mistake of telling the truth. elon musk dared the analysts. i think you are bored? alix: why are you not going private? if that is your attitude, why are you public? >> that is a good point. you cannot say give me billions of dollars and not be accountable for taking the money. david: if he wants billions, but that chart backup about what happened to stock price. he not going to get into equity markets. he will have to borrow. when he is saying we don't want to talk to you -- look at stocks. bonds lastit issued year, investors didn't want to buy them because they had to. if you see that search for yield, it might go away, how open will the debt markets be?

david: it is also on the index. people had to buy it. >> than they got trapped. investors are not happy. [laughter] on the credit or equity side. david: burning for more than $1 billion in the last quarter. he needs more money. [laughter] >> the probability he will spend the rest or majority of cash is a high. for a company that leads money, it is not a big in a push when there are production delays. david: he is a show man. much.thank you both very coming up, the fed signals more on inflation outlook and how the market is reacting. steeper yesterday, a little bit flat today. the trend upward. the ecb, from inflation developments remain subdued. he says it is too early to call mission accomplished and that stimulus remains necessary. what we wind up seeing from data

as core inflation in the eurozone misses estimates coming in at 7/10 of 1%. euro still up but rolling over a caps on headlines. this is bloomberg. ♪

♪ david: the federal reserve yesterday announcing f1 see meetings, surprising no one keeping rates where they are. admitting inflation is getting your target. there is how some investors reacted. >> i think the statement is loud and clear. mission accomplished. we reached full employment. inflation hitting 2%.

moving withnue planet rate increases. planned rate increases. inflation will run hot and a few months. >> if the fed moves higher, i expect a june rate j theyberg business flas -- june rate hike -- i don't think they can do that. shooting on inflation, raising rates, allowing unemployment to continue to fall, i think we will have four rate hikes. >> the market reaction is tepid. this is what the market expected. an upgrade, characterization, symmetric helps to clarify if you are hitting above or right at 2%, you can go higher. >> the economy seems to be on track that they thought it would be on. tight labor markets, pretty good growth.

inflation coming up a little bit. they will watch it. they will certainly keep on their schedule of raising unless something terrible happens. david: welcome to kathleen , to be clear, kathleen is in boston. carl, let me start with you. that string of speakers saying inflation will run hot. is this symmetry? >> this is the symmetry angle. they're willing to tolerate overshoot. they keep reminding us 2% is the objective, not a ceiling but a target. all of this language reminding they will let it overshoot to a degree. even so, they did less than they could have. i disagree it is mission accomplished. it is almost a accomplished,

given the language changes in the statement. they are expressing doubt that they think we have arrived at 2%. this is signaling a very confident, show me fed, that will move very gradually and it will take a lot to bump them off their perch. confident but not as confident in the growth picture. kathleen: there is a lot of uncertainty out there, particularly with trade issues. they cannot tell what exactly is going to happen. that is the area where there is less confidence. alix: that was an interesting debate after the minutes. it implies fiscal growth we're expecting, strong global growth will not materialize. other said, they had to take it out. q1, has affects, it will be ok. carl: q1 was soft.

i don't know that it was weather driving it. seasonality showing up in two thirds of the last 12 years, three of the last four as well. we saw softer growth in q1 relative to q4. we saw a relatively soft consumerwe saw a relatively soft consumer spending. that was straightforward mechanical adjustment. i would not over interpret. alix: you always have to blame the weather. david: that is what weatherman do. alix: the reaction was immediate. herb steepener, flattening today. is the short over for now? how are you position? -- positioned? kathleen: we have a lot of cash since there is not a lot of of value in the market. i don't think the short end of the curve -- that volatility is over.

i think supply we see coming will continue and it is technical's that will weigh on the market. investors need to stay clear of tootening up to much -- much when we're expecting supply and demand's diminish. david: let me ask you about one number, $1.5 trillion. the fiscal stimulus -- where is it? visit expressed in the marketplace? is the market anticipating? where is that money? kathleen: that is a great question, david. that is what is lingering over the market. it is hard to assess how strong growth will be. we have not been in a period where fiscal policy is driving the market. it has been all about central bankers. that is coming to an end. nds to work in a lag.

we are only a few months into the changes happening with tax code. give it time. we will see surprise in terms of where growth is headed. alix: carl? carl: give it time. number showed up in q4 consumer sentiment, business sentiment. the tax cutsgot to in place, look at the durable goods trend. you don't see capital deepening. it may come. the did not show up in q1. the same true for personal spending. households are not spending tax cuts yet. we will likely see that materialize in the current quarter but it was not evident in q1. this is a problem for policymakers trying to factor in what the tax cuts do and what reforms do and q1 does not the great. i still agree with kathleen. give it time.

alix: on the curve one more time, if we still have flattening, the way to go, there was a trader on bloomberg that says it is evolving to the powell curve? kathleen: that is interesting. i have not heard that one. . it makes sense . i find listening to powell refreshing. he speaks in our language. has been a bit of a change at the helm we should pay attention to. alix: thank you very much. kathleen gaffney, sticking with us. william, outgoing dudley will be joining matt for an exclusive exit interview as he prepares to leave the largest and most influential federal bank. live plus matt's. bowtied.

if you don't like it, dump it. >> i'm not here to convince you to buy our stock. do not buy a car volatility is very. up, we hear from ben kallo, who prompted that testy response. this is bloomberg. ♪

♪ >> elon musk says if you cannot stand the heat, get out. our next guest encouraged him to give more updates on production of model three sedans. on how buyoutted that we are now.

great years are made out of quarters and great decades are made out of years. everyone's short-term focus has been volatility has a way of shaking people out, even that are strong and want to be there. >> ok. >> anything you can do to help in the near term is helpful. >> i think that if people are concerned about volatility, they should not by our stock. i'm not here to convince you to buy stock. do not buy if volatility is scary. alix: joining us now, ben kallo, it is so good to talk to you. the move in stock last night after hours blew my mind. holding up after hours earnings and then him unwilling to answer questions, stock move lower and he continues. what was your take?

ben: first of all, good morning. there is a couple things. his approach, obviously, didn't know go over well -- didn't go over well. first of all, metrics, the performance, weather with the model three or gross margins or the cast position -- cash position beat expectations. the backdrop, most shorted stock in the country. constant noise he is having to answer -- companies having to answer. i understand the frustration. they laid out the details, a very detailed quarterly report. after a while of getting the same type of questions, he got frustrated and said, let's move on, i do not have time for this. is that the right approach? it is not making friends. but this is who he is and this is what you get with tesla and

this is why tesla is where it is at the same time. david: if his job was not to sell stock, he did a great job. you saw what happened to stock prices. he is burning through cash. maybe not as much as we thought but it is a lot, over $1 billion. he is likely to need more cash before the year is out. how will he get that? does this mean he will have to go to debt markets rather than equity markets to raise it? ben: he reiterated that he will not raise cash. no one believes that. was really trying to pander to the markets, he would not have acted like that. that is something the bears are missing. hawk orfraud or he is a whatever term you want to use -- getting louder and louder -- for a guy to say, do not by our our stock, that is

honesty that we don't hear from many ceos. alix: if they're going to burn through their cash this year with a buffer of $1 billion -- at some point, will the market be as open as before? metricsthey deliver on he set out, ramping model three and hitting targets, hitting profitability -- i think the market will be open. along the way, that is what i was trying to get out -- if you give updates, the market opens for you. alix: then he shut you down. ben kallo joining us with a rating on tesla. trump up, president economic advisers to china. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. s&p futures are flat, and so are

dow jones. european stock a little heavy. ftse is flat. weaker inflation data in europe. core inflation rising 2.7%. services pmi missing in the u.k. , as well. both of those things are not gh the language from the fed. dollar is weaker for the first time and four days as the pound and euro to 10 you to pound a little bit higher. we are a little bit flatter today, but the trade was super yesterday after the fed announcement. the dovish feeling drained true. one trader said we might have a powell curve floor. david: let's get an update on headlines outside the business world. kailey: a's surprise revelation last night about president trump and adult film actress stormy daniels. the president reimbursed lawyer

michael: in hush money that he paid daniel's just before the 2016 election. that comes from former new york mayor rudy giuliani, a member of .he president's legal team it apparently contradicts president trump's recent statement on the matter. u.s. army special forces have secretly joined up with saudi yemen.to fight rebels in about a dozen of the green berets are hoping to locate and destroy bola stick missiles and their launch sites. the rebels had launched missile attacks against saudi cities. new economic figures are a setback for european central bank policymakers to it in the euro area unexpectedly weekend last month. it muddies the debate over whether the ecb should pull back on monetary stimulus. 24 hours a day on air and twitter powered by more , than 2700 journalists and analysts in more than 120 countries.

i am kailey leinz. david: the u.s. trade delegation has begun its meetings in beijing now. premier is vice there, and no listen six senior representatives from the u.s. government will be across from him, including steven mnuchin, robert lighthizer, the u.s. ambassador to china, and national economic council kudlow.r larry coul gaffneyy and kathleen are with us. six people? what does that say about our negotiating position? >> it is complicated because this is a team of six, yet a divided team. we have some people who are what you would called dubs on trade that are looking for a deal with china. are persuading others that we are not going to get china to budge.

trouble seeing a lot coming out of this meeting. , you have trump with his set positions. with his set positions. neither side showing any flexibility. advancedly send an delegation when you are serious about negotiations. you lay the ground for it. that has not happened. thed: talk about differences between these parties and what is likely to come out of this. looks like we will make some adjustments maybe around the edges, and the u.s. wants fun little change in market access, things like technology approaches and things like that. how important is this for trade and the economy overall? >> the trade is very important. , i thinkd of the day very little will be accomplished. this is an example of a lot of

bravado, a lot of people coming together. are seeing two very to her personality and very little areence that therer going to be serious negotiations. i think not much is going to happen. there is a lot left to worry about in terms of trade. alix: 1100 economists sent a letter to president trump and said that the country cannot permanently by from us unless they are permitted to sell to us. we would urge our government to consider the bitterness which a policy of higher tariffs would inject into our international relations. it does not furnish good soil for the growth of world peace. it was a staggering statement and echoed very much the 1930's. iser, the backdrop for me slowing inflation, especially in europe and the u.k., weaker

export growth, particularly in europe, and stumbles in the emerging market. that is not a good combination. the u.s. economy here, obviously a trade were would have two contradictory effects. one, it would raise the price of imports, which is inflationary. on the other hand, it might reduce our exports, which is slowing the economy. stagflation could be the outcome of this. i seventh with the u.s. delegation going over there, because it is a tough problem. china is a rising power that is not playing by the rules. the question is, what is the right way to try to draw china in? trump argues that it is not that we are in a trade war but have been in a trade and have lost it. tvid: kathleen, what about point -- in terms of trade,

china was a modest economic power, but it is in a very different position now. a lot of people think the rules of got to be changed. isn't this the time to do it when there is a relatively stable world? that is as opposed to when we are in a downturn and you are not able to do it at all. >> we can argue for small changes at the margin. china is a rising power. they are looking at what their future costs are. one of the things we are seeing in the market right now is that oil has broken out of its range and is moving higher. we're still an importer, so our costs are going up. china has got to think about that longer-term. todoes not benefit anyone have either superpower struggling to get growth going. so i think a lot of this will in thebeing fought currency market. so it is less about trade negotiations and having the

impact play out in currencies. david: why do you say it is around the edges? we have a graphic saying there are fundamental issues, such as technology and i.t. and still overcapacity, market access. there are fundamental changes. in fact, the u.s. could work fundamental change in those regards, and when that be better for world trade? >> well, the fundamental changes are significant, but i do not think you are going to affect those changes. you have got to have a win-win situation. and when both parties are a different size of the table, it is very difficult to get actually negotiated. a lot of headline risk and a lot of rhetoric being talked about. but at the end of the day, it is more important to keep the global growth growing all around the world. alix: i want to pick up on what

you said about it playing out in the currency market. the dollar has had a rally. how do you see it playing out with emerging market debt and the currencies? >> that is a very good question. what we are seeing is that when the dollar rallies, you are getting a response in emerging markets. in terms of flows, we are still seeing a fair amount of info into emerging market debt market, mainly because of the carry. but not every country is going to be growing at the same rate. so what we are also seeing -- last year, we saw the mexican peso getting hit because it was the currency that would be used as a hedge against long emerging-market trade. that is not impacting the brazilian real.

it tells us that the market is trying to recoup the additional yield coming out of emerging markets but is concerned about slowing and growth. again, i think this is just for a moment and back time that we are hitting a bit of a soft patch. alix: thank you so much, peter coy, and kathleen that the -- kathleen gaffney to be sure to watch this afternoon at what a clock p.m. esther to my new show, "commodities and." edge."modities i will get good insight into what is happening in the permian. we will talk about what is happening on the ground. david: would not miss it. a tough club to get into, but for $25 million, you might have a chance. we look at wall street beach. and tom keene and jon ferro from

7:00 to 9:00, and pimm fox from 9:00 to 10:00 on bloomberg radio. live from new york, this is bloomberg. ♪

kailey: this is "bloomberg daybreak." ,oming up, gary hemingerl marathon petroleum ceo. david: the opening remarks of this wii's businessweek is -- this week's businessweek is about the future of news here we have reason for being a specially interested in it this week here at bloomberg.

john joins us. the piece partly for self-promotion, and internal reason we are launching a consumer subscription service this week, and it made me look at the news industry more generally. and going to the white house correspondents dinner, you could look across the ranks of newspapers. what struck me is you look at years, 10 years ago, everybody was talking about the desk of news. where i worked called "who killed the newspaper?" but news now is generally doing well. "the new york times" and "the washington post." press, policy in of the it is an amazing transformation. there has been a big change in the way people are consuming

their news. david: what has it done for society overall? to what extent has it gone from broad to narrow and deep? >> that is a really good question. at the top end, it has been nothing but good. what happened is that people have looked at these models, and the reason why it has changed is partly because people have not been able to make as much money out of advertising as they hoped, but the bigger reason is that consumers across the west, across everywhere actually, people who have got more money than time are prepared to pay to get these things. because nowadays, you live in the age of netflix and spotify, and they are prepared to pay for news. they want new things. but it does not go everywhere. you look at some parts of local american news, those big state papers that were fantastically , they send one time people to washington to cover

congress, and that is harder now. cities of then world, the main newspapers in the world have recovered and have a business model that seems to work. but local papers are still having some difficulty. david: if you are a ceo, you can learn a lot about your business and do a better job. it is also true of a global advisor. alternately, at least i think, it has created a demarcus he for the electorate to be informed. as a practical matter, are we losing our peripheral vision? >> i think the answer is no. the answer is that we are never going to know. we knew -- when you look at asia fake news, what is interesting is that it comes in spasms -- when you look at the issue of make news, what is interesting is it comes in spasms.

what happens is that people things theg for trust, and advertisers start going to think that make sense. i think you are arguably living through that now. you look at big banks, they're cutting back where their advertising. jpmorgan used to do 400,000 sites, now 5000. consumers around the world, these are not small things, their growing quickly. "the new york times" has 10 million digital subscribers. it cascades down. remember, all these sites, including ours, is metered. so it is not just for the people who are paying. other people can look at content, too. look at the #metoo movement, that was started from one piece of journalism. it changed the way young woman look at each other. for: a shameless plug

david, but he wrote a book called "exit interview," and he tackles and adjusting question. what is your role as an news provider, to give the news people want or what you think they should have? that also goes to a point in terms of if you just go to one news outlet but you have blinders on, you miss everything else. >> from an editor's point of view, this new world that has happened in the press is actually a good thing. although advertising is a wonderful thing and i am pleased with it, it is easier from an editorial point of view to deal with subscribers, deal with consumers, because they are paying you directly. far fewer conflict of interest. i think the move to this is better for journalism. in terms of the multiplicity of opinions, look at fox or msnbc. withhas happened generally this birth of technologies that

we will it pup up with a more varied -- we will end up with a more varied media than before. i am an optimist. the truth is you never really find out in terms of the political range of the press angela afterwards. then it -- range of the press until afterwards. then it is what we missed, what we saw. david: it is history. thanks so much, john micklethwait, bloomberg editor-in-chief. beginning today, there is a new bloomberg.com. we have relaunched the website with a host of new features, so head over to check that out at bloomberg.com. now to wall street beat, three things wall street is buzzing about. first, license to trade. once reserved for only financial institutions. but wall street elite can join that club for a small price of only $25 million. 's big shift seeking to capitalize on tax reform and win more investors. finally, mad musk.

on his call with analysts, he turns off the charm and turns of the road rage. alix: jason kelly, bloomberg's executive editor for bloomberg television joins us. i want to talk about this exclusive club. >> baller alert. people are drawn in by this. nsteads a master i agreement. so instead of being a firm, you can be a person and treat all sorts of things, especially in the derivative market, the normally you would not be able to do, but you need to have $25 million. you have to have a very strong stomach for risk because you are putting your own money on the line. you are not investing other people's money or the firm's money. this is you. but of course, you can make a ton of money.

we spoke to someone yesterday who made it into the club. >> it is interesting when you think about different reasons people do it. it is the ability to train things that they would not necessarily be able to do under the auspices of firms. some people do it for real estate and other sorts of insurance. decided they are going to become a corporation. >> one of the things we have been talking about a lot, almost the changes in the tax law. private equity firm, the first mover here, everybody is watching to see what happened to their stock. as you guys know, so many of these big private equity firms are now publicly traded. they need more public investors. this move, the main thing it does is allows them to be much more appealing to index funds,

to mutual funds, and the stoxx lyected very positive already. it has to be a corporation. alix: what about blackstone? >> blackstone, oaktree, and others have been considering this. we are to hear what happens next. nameobviously being the that it is in the history that it has on wall street, this will be a big move. again, the numbers do not lie. the stock initially was of about 6%. went up 14% the day it announced, the biggest jump it had as a public company. alix: numbers do not lie, and recorded sound does not either. what happened on it -- this is what happened yesterday on the tesla earnings call. >> next, next. are not cool.s next, sorry. this questions are so dry.

killing me. i am not here to convince you to buy our stock. do not buy it is volatility isn't scary. there you go. alix: what does wall street make of this call? >> everybody's talking about this. overnight, this morning, all across the globe. for wall street, the analyst call is, as both of you know, a little bit of a kabuki dance. when i was a young reporter covering tech companies, it was one of the things you had to do. you listen to the back and forth. it is very scripted. time, there is information that is come out of these. tv pop-ups the -- david: absolutely. how many ceo's around the country are secretly applauding him? >> oh, everyone. teslathey do not have a

already are buying a tesla now. i could be that guy. .avid: jason, thank you coming up, german automakers are going electric and could give tesla a run for its money. live from new york, this is bloomberg. ♪

watching, cars. here's something we might not have focus on the elon musk yesterday. how many people are coming into this market to compete with elon musk, particularly in europe? they are announcing so many cars. they have got porsche, mercedes-benz, vw, jaguar with a new suv. blue is the model 3. we still ahead, but look at the others coming into the marketplace with really high aspirations. so he will have some real competition.

alix: i have two feelings, one is that companies are going to have deeper pockets at there is simply line. there are actually car companies rather than tech companies. the other part is that the demand still comes from subsidies. they still need government to support it to have this kind of growth. that raises questions about sustainability. alternately, it is about commodities. if they build a bunch of cars, they have to have some stuff from commodities. alix: lithium, cobalt, nickel, and they also competing for that. at 1:00, we can talk about commodities on bloomberg edge. coming up, the deutsche bank chief global strategist will be joining us on earnings season. this is bloomberg. ♪

i am not here to convince you

to buy our stock. isn't volatility is scary. there you go. alix: tesla gets testy. elon musk refuses to answer questions on model 3 production, margins, and cash. the symmetric tango, the fed ads the word symmetric to its inflation outlook. the market questions the trade. let's get ready to rumble, the u.s. superstar trade the legation kicks off in china today. high-stakes, hopes are them. david: this is "bloomberg daybreak." i am david westin. i am here with alix steel. elon musk gave us a show. alix: he did. in the markets, nothing really happening, steady as she goes, calm. euro-dollar is interesting. a weaker dollar today. that symmetric word

overshadowing weaker inflation and europe, as well as weaker services in the u.k. .3%,dollar now up by $1.19. buy bonds. 2.94% on the 10-year. crude going nowhere as we wait for the deadline on iranian sanctions. nearly 80% of s&p 500, use have been out with earnings, many exceeding estimates. most stocks barely moving that after recording -- reporting. joining us now is binky chadha of deutsche bank securities. first of all, earnings season , we're getting earnings that are very good, and i would argue they are unambiguously good, not just about the past quarter but also what they're telling us about future earnings. i think it is important to keep in mind that we have been in a

pullback since the first week of february, february 2 to be precise. so you have to put it in that context. positioning was a big issue as we argue all the time. mode, the question is, we have got this great earnings, so why hasn't that really helped the market? there are a number of issues, but predominant is the concern among investors that we are very late in the cycle. there is cost pressures so margins are going to go down. so we have this great earnings, but there helped by the tax cuts, the depreciation of the dollar which is going the other way, rates going higher. the list is very long. thati would argue is probably the biggest misconception is that we are so late in the cycle that cost pressures are just going to tip us over.

i would argue that is a very big misunderstanding. if you look historically at business cycles, which is what equity returns are tied to, labor market tightens, inflation starts to reflect up, but a pickup and wage inflation has historically been always associated with higher margins, not lower margins. well, thatt say, haven't historically, but what about now? what i would point out is to look at q1 earnings and q1 margins. thee are new highs for cycle. alix: that is what this chart is essentially showing, average hourly wages versus net income margins. david: that does not really show hourly wages going up very much yet. maybe it will be tested tomorrow with the jobs numbers. >> that is absolutely true. but if you were to draw vertical the greenhe kinks in

lines, you would see that as wage inflation picked up, margins picked up. if you look at q1 margins, we are a record, and that is definitely do to the effect of the cut in the corporate tax rate. that,f you adjust for margins are still higher. so this is happening. this is playing out. i think the reason for this misconception is, you know, i would argue too much reading of textbooks. talk about peak earnings, we have to think about the caterpillar ceo. 2-wood the beginning of the earnings cycle, he was warning some thing people are picking up on. you are saying it is not necessarily wages, but what about the tax cuts? i would say two things. first on the caterpillar earnings call, definitely had a profound impact, no question about it. but instead of reading about it,

you should listen to the entire earnings call. the high watermark comment is made in the opening statement. there was a question in the middle of the call, and the response was, yes, as far as this year is concerned, our margins may come down. but the last question of the call asks, are you guys trying to communicate something here about peak cycle earnings are margins, and they said absolutely not. i would say it is very clear. alix: so how do you explain the chart? it is earnings estimates for this year, next year, and 2020. 2019. it has picked up a little bit. 2020 has not caught up. does this scenario play out or do 2020 earnings estimates and 2019 have to play catch up? a little impact. growth rates will slow. i would argue that earnings estimates will continue to be revised up. ofjust got one quarter

earnings, so the increase needs to be divided basically by four in terms of what it has for the annual impact. but we fully expect earnings estimates to go up. if you look at the estimates for quarter, i realize it is historical now, but it is worth looking at a chart. in every earnings season, what typically happens is the estimates are cut a 1% or 2%, and earnings beat by 3.5%. they're usually couple percentage points higher from before earnings are reported. this time around, would you saw is earnings estimates were not cut, and earnings estimates in the aggregate are beating by 6.5%, so it is about twice the , starting off from a bar that is two to three percentage points higher. in my view, earnings will be good, and the price action is

taking control of the narrative of what is happening with fundamentals. buybacks -- not by growing the top line but having a smaller denominator. how much of what is going on here is excellent stock buybacks? >> two points to note. one is that buybacks and to be pretty variable. the business cycle employs each movement in earnings. what i would argue is to look at the impact of soft buybacks -- stock buybacks in terms of earnings per share, you want to look at normalized earnings. that is easy to do with the s&p 500 because of the unchanged trendline for the last 80 years. if you do it relative to that strength so it is not biased to very low earnings are very high earnings, you should conclude that they are adding about one percentage point, 1.185 percenge pois to earnings. itnot e bu of earnings.

alix: i want to touch on what is happening with leverage. if you have companies with higher leverage that are -- higher leverage. rates are rising and volatility is picking up. how does that impact the markets? leveragects about today that are important to keep in mind. if you look at the market as a whole, aggregate measures of leverage are not particularly high. i would argue that is misleading. if you look at the cross-section of firms and the average companies, the median companies, leverages very high, at 50-year highs. balanced,, that is and you need to balance that against the fact that interest rates are low. interest costs are very low. so a concern about leverage medium-term would be a concern about just rates rising a lot, number one, and number two, the point i would make is companies

that use the prolonged period of low policy interest rates to liabilities, they have been encouraged to borrow and have borrowed, but as interest rates go up and short-term interest rates go up, they should be -- there should be very limited impacts on their interest servicing costs. one simple fact you should keep in mind, which is the historical channel has been that as short-term interest rates go up and corporate's are borrowing shorter-term, they go up immediately. today for the s&p 500 as a whole, cash holdings are three times the size of short-term debt. so as interest rates go up, s&p 500 earnings are actually going to go up, not down. that is obviously not a high quality improvement in the it asgs, so i do not give

much importance. but the more important point is that it is not bearish for the market as a whole. binky chadha is sticking with us. coming up, the biggest oil refining deal of all-time. we going to discuss marathon petroleum's takeover of endeavor. highlight the markets. s&p futures dropping like a stone. gold popping. dollar lower. yields lower. the question i am trying to figure out is why. we will keep you updated. as you can see, nasdaq futures of by .4%. the dow up by triple digits. this is bloomberg. ♪

marathon petroleum

announced it has agreed to buy endeavor for 23 point $3 billion, creating the largest independent fuel maker in the u.s., and the deal will join the east and west. here is a look at the refineries of the two companies in the u.s.. , marathonger petroleum ceo, joins us now to congratulations on the deal. i was off that day that saw the headlines. i said, finally, the m&a is going to start to pick up. why the deal, why now? >> endeavor has had a great run for their shareholders and so has marathon. when you step back, we decided that we want to create the best transportation company in the country. combining these assets, we believe we can use the best practices from both companies to really change the way we do .outine maintenance

we do turnaround around spirit we believe we can lower our costs by at least $1 billion. when you take $1 billion after two companies, it is good or shareholders and also good for the consumer. when you look at where gas prices are, we're always trying to achieve more cost consistency. at the end of the day, it will be good could and as for consumers. about refining and retail. how much of those are job cuts? two corporations together, you do not need all of the executive team. there will be some cost elimination. and when you step back, the majority of the synergies, the reduction in cost, they will be around best practices. i was talking about an acquisition a couple years ago, and we are going to be able to take a platform on here that extends from west of the mississippi all the way to the west coast. today iso go to market

many different brands. we're going to bring in the speedway brand, just like we turned over the hesse stores here on the east, and we will take the speedway brand to all company operated stores. so we will now have about 4000 speedway stores across the country. alix: do you have a percentage of job cuts? >> we're just starting into the whole integration. we cannot do that until we announced the deal. today is the first kick off on the integration. we have highlighted about $200 million in total cost elimination. some of that is job cuts, but you do not need two outside legal firms. it will not all be job cuts. alix: if you look at the map, what is interesting is there is no overlap between the two. it seems like this should sail right through, but the government has up and is friendly to vertical deals. what is your expectation? >> you are right.

there is absolutely no overlap from the refining or from the pipelines or retail marketing. mississippithe river is dividing the country in half. all pipelines run from the mississippi river west to east, south to north. there are no pipelines right at the mississippi river that far west. all of the western refineries have more of a niche market. there is no overlap whatsoever from how we are operating today and we do not expect any issue. alix: i want to get into why the integration. we are seeing in -- differentials in the u.s.. i want to highlight the midland-houston spread of you cannot get oil out of the permian, and new the more pipelines you have, the more you can take advantage of that does come and move it and export it. how much can you capitalize on it with this merger? >> you're absolutely right. andeavor had just announced last

week they were going to between 5% owner and a brand-new pipeline built, and we have a refinery with 600,000 barrels a day. we have about 400,000 barrels light sweet demand. here is a natural fit. we've not put that into our synergy numbers yet he comes were still in the process of negotiating which pipelines we're going to ship this oil onto it but it will be a natural fit. and will they gather transport about 200,000, 250,000 barrels a day of light sweet crude. it does two things. batch this will be a system, so we will be able to get the crude from the wells, and it will remain clean, not blended. we will be able to take that crude into refineries and get a higher yield. , as we move this down the pipeline in this batch lay a, we will eventually

lateral off the pipeline or possibly team up with another pipeline to be able to supply the refinery incident exporting that crude. alix: and it is good for the shippers in up for 2020, the international maritime organization rules. you will have to have lower sulfur content in your crude, and that is only positive for refiners who can refine that super light crude into that slow sulfur product. how does this help you take advantage of that? >> you're right. when you look at combining marathon and andeavor, we would have the highest hydrocracking capacity in the country. being able to take the heavy resid and hydrocracking it to make it into additional diesel the, having that kit in refineries, we will be very well-positioned. not just on the refining side. with andeavor, they have through the largest ports on the west

coast, and we have two of the largest ports in the gulf coast. so we're very well set up to be esid frommport any r other refiners who cannot that into more diesel fuel or gasoline. so we can import that, and we cost,pecting a much lower and we will be able to refine it and continue to hit the us what markets. we will probably be the largest exporter of refined products in the country. alix: are you doing m&a? >> we have a lot to look at. alix: $23 billion merger. gary heminger, marathon ceo, thank you very much. do not forget to tune in this afternoon at 1:00 p.m. eastern for my new show, bloomberg "commodities edge." my guest will give me insight into what is really going on with oil services companies and the permian. coming up, two inflation

challenges. the ecb facing a conundrum while the fed keeps it's cool. and a rollover in the futures market, gold moving higher. yields moving lower. .3%.asdaq now off by this is bloomberg. ♪

alix: your zone cpi weaker than estimated, while the fed plays cool as inflation kisses its 2% target. look at the terminal to see the difference. eurozone cpi rolling over, before just rising .7%. with as is inky chadha of deutsche bank. -- binky chadha of deutsche bank. it was supposed to be the year of convergence and what happened? >> the biggest lesson, the central banks will go slower than you expect.

they will go slower than everyone expects. u.s., we're definitely on the path to getting there. yesterday's meeting is actually very important in thinking about how the fed think's about inflation. i read what they said yesterday as essentially welcoming the move in inflation up to 2% and the emphasis on achieving the 2% target symmetrically. i think that message has not gotten through enough. when you think about two are three simple facts him a number one, the fed is not met its 2% inflation target in terms of the now.pce for 10 years actually, if you look back since 1995, it has not really met it except for one brief period.

the reason, i would argue, is that, relative to a target of 2% inflation in terms of measured by the core pce, inflation expectations are essentially too low. inflation expectations, i would argue, are the only driver of inflation longer-term. tight band for the last 23 years with inflation. since 1995, 1996. if inflation expectations are pcelow to meet the 2% core need to letrget, we inflation on higher. that is why the emphasis on pce. many people talk about inflationary of about 2% as overshoot. i would argue that narrative will gradually get digested. i would argue, while i am and we are very hawkish on inflation, it is important to keep it in

perspective that we have been in a band for 22 years. it is not likely to break. i think we are at the top of the band. from an inflation point of view, being in thehe fed process of welcoming it. in terms of short-circuiting, think that is a long ways off. david: let's talk about earnings again. europe and the united states. chartked -- we have a bar . not so good over in europe. they have done much more modestly in earnings so far than the united states. this is now growth, overall growth. 22% versus 3%. 9% versus 3%. what is that about? >> no doubt that european earnings have been disappointing. but if you look at those numbers, 23.4 percent for the u.s. and 2.8% for europe, the

first adjustment you need to do 6% to 10%, and we will know better and time -- no better in time, for the corporate tax rate cut. mind that the euro, to 10%nt to 10% -- 8% depending on the measure, and that takes off about five percentage points. it is getting a lot closer. the final point is what we started with -- alix: we have got to leave it there. thank you for sticking with us. this is bloomberg. ♪ mr. elliot, what's your wifi password?

wifi? wifi's ordinary. basic. do i look basic? nope! which is why i have xfinity xfi. it's super fast and you can control every device in the house. [ child offscreen ] hey! let's basement.

and thanks to these xfi pods, the signal reaches down here, too. so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. alix: this is "bloomberg daybreak." i am alix steel. dow jones futures off by triple digits. this could be a d.c. affect in

the markets. a broadly weaker dollar story. buy bonds. euro gaining some strength despite core inflation coming in at low estimates. 10-year spread flattening. will that be the trade of the day? crude now down by .3%. the data coming out now, continuing jobless claims coming in at 211,000. job market still doing well. unit labor costs coming in at quarter ongher quarter but missing the 3% estimate that we had. productivity coming in a little bit light, up by .7%. i want to get to the trade balance coming in at -$49 billion, a touch lighter than what estimates had been. david: i think it is fair to say it is not getting better fast enough to satisfy the president's taste.

alix: but it is not getting worse. david: that it has not improved a lot under his administration, which does not make him happy. alix: no, it is not dollar-yen right around the lows of the session. yeah, david, there you go. david: the s&p continues to be the story of the morning. it just dropped off. alix: if you look at the deficit, imports fell but exports did rise. imports fell the most in two years as exports actually hit a record. the exports were about civilian aircraft, soybeans, and energy products. imports are consumer goods that the client and capital goods. where is that tax reform? david: aircraft is really coming through. that is a big factor. to some extent, our exports should be going up because the dollar is cheaper. alix: in the year he. -- in

theory. the merchandise trade gap with china did widen to about 35 billion. david: in k's they were running out of things to talk about in beijing, they have more to talk about. let's talk about the meeting today in beijing. is there,e premier and they have six people from the united states. here are the pictures with thes, led by steve mnuchin, treasury and wilbur ross, secretary of commerce. chadha andd by binky maggie gage. looks like the six individuals will be negotiating with one another because we know they have different views on trade. >> very true and a great point to raise. our in-house view is one of the key hurdles here to dictate

success versus non-success with negotiations in china is whether the u.s. team can all still message together. when you have a group that is pretty equally divided, that is no easy task. that is something we are watching closely. what: does mr. liu he know we want? >> i think our president and this team have been pretty clear infar, at least in outlining principle what we want. but the devil is always in the details. i think they are in trouble coal truck negotiate's and style -- negotiation style, so i think there is room for negotiation. in the first round, this tit-for-tat tariff war -- we will not call it a trade war but a tariff war, at least for now, there is some room for negotiations between the u.s. and china. david: as you suggest, the chinese have telegraphed that there is room around the fringes. but the president has not

indicated that the fringes are enough for him. why are we doing it at all then? why does it matter economically for businesses in the u.s. are for our economy? >> i think it matters in the longer-term direction for this administration and for china. while this is not the first round of negotiations, we expect second and third rounds, much like we have seen on nafta. what we're looking for out of this first run are those french deals that de-escalate in the short-term as well as maybe the starting of a framework to work longer-term towards some of those was an ideal chinese trade practices. binky, we are putting up a list of sort of key issues. this is not around the fringes. is this a risk or and opportunity? for the u.s. and for trade and for the economy. >> i would argue it is an

opportunity. it is sort ofthat tradeant to keep a world agreement and historical perspective. in the way i think about where china and the rest of the world, when china joined the wto, china was in a very different stage of economic development. china is a much bigger part of the global economy today, and those trade agreements just really have not been modernized. number one. and i think the chinese would agree with that. somehaving taken initiatives to reduce the friction suggest that they do. hear whathe way i they're saying, coming out in favor of china modernizing this trade regime, it is unusual for multilateral institution like the imf to take one side in what

looks like a conflict. for the imf management to come up in public in favor of that means there was discussion of the executive board. so there is relatively general agreement that this should happen. now there is the politics and the economics. there is much greater agreement on the economics. now the politics have to align. alix: on the flipside, he had about 1100 economists writing a letter to president trump. they said the countries cannot permanently buy from us unless they're committed to sell to a spirit we urge the government to consider the bitterness that a policy of higher tariffs would interject. the tariff war does not furnish good soil for the growth of world peace. you have to reform what the economy winds up seeing. the u.s. has to save more and .hina has to buy more

the chinese side, you have a growing population. i think consumption at some level will start to rise over the next several years. on the u.s. side, we have seen less evidence of the latter part of the question, which is more savings on our end. meantime, we are looking to, we , that the the letter tariff war cannot continue. it can be a tool in the toolbox but not a full strategy. that is what the first round has to produce. david: you raise an interesting point about savings. with federal deficit, we're going in the opposite direction. we are borrowing much more money. understand that you

cannot be increasing the budget deficit at the same time? on their minds. particularly, we look at the recent tax-cut package, which will cost some money, at least upfront. borrowing could come from the chinese government, which would take a tool away from our toolbox, if you will, to go back to that analogy. it has to be on their minds. it would be interesting to see how that plays out in negotiations. it is something we're hearing more of here in d.c. on the ground, whether it is with the administration or with congress. i would imagine that the fact that the economy has proven to be the number one issue in upcoming midterm elections, that has to continue to remain front and center in the conversation. david: and specifically growth. president trump the game president by promising growth. he said he is progrowth. tax cuts. what would you do with respect

to trade? define exactly what it is we want to achieve with the chinese. but it lack of trying, is unclear exactly what it is we want. it is not clear exactly what we want, then it will take that much longer to get where we need to go. the goals have not really been set. is it having a negative impact on growth? all surveys are tinged with some element of emotion the kiss they are filled out by human beings -- emotion because they are filled out by human beings. most companies say not yet, it does not affect us. , it is definitely not a positive. to be clear, i do not disagree that china's trade regime needs to be modernized relative to where the country today is and

its economic development. it is a question about the right strategy. is,rategy of undue friction in my view, it is not good for confidence. alix: maggie gage of credit suisse, thank you very much. and binky chadha of deutsche bank, always good to catch up with you. i want to recap some data. highlight was about productivity. did not deliver. were unit labor costs came in at about 2.7%. you had a softer first quarter. are we going to get the boost to capital investments from tax cuts to push up the productivity gains, and what does that do to longer-term growth and unit labor costs? that is the question. the trade balance is -$49 billion, not as wide as estimated. it did widen with china, the

merchandise trade gap widened. that is front and center with the china-u.s. trade meeting happening in beijing. imports and the u.s. fell, exports rose. fail data continuing as we to get the consistent boost from the tax cuts. on what is making headlines outside the business world. kailey: president trump has changed his story about adult star stormy daniel. it was said that he reimbursed michael cohen the hush money paid to daniels. he denied the arrangement was improper. president trump called the claimed they had an affair falls and extortionist. president trump says stay tuned for news of three americans being held by north korea. the president said the u.s. is working hard to gain the release. he is preparing for a possible summit with kim jong-un this month or next.

economic figures are a setback for european central bank policymakers. inflation in the euro area unexpectedly weekend last month. consumer price slowed to 1.2%. that muddies the debate over whether the ecb should pull back their monetary stimulus. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. david: thanks. coming up, amazon, facebook, and apple are among its top customers. we will speak with the akamai ceo, next. later, you can listen to tom keene and jon ferro from some of the clock to 9:00. bloomberg surveillance can be heard in new york, boston, the bay area, washington, d.c., and across the united states on sirius xm radio. live from new york, this is bloomberg. ♪

kailey: this is "bloomberg daybreak." coming up later today, the oak street capital management ceo. and now to your bloomberg business flash. socgen is ready to pay up to $1 billion to resolve to populous investigations. according to people familiar, an agreement between the bank and the justice department could be announced this week.

the probe has to do with the reeking of benchmark essar rates and allegations of bribery and dubya. bayer has cut its forecast for the are, blaming foreign exchange rates. at the same time, they repeated that they expect to close at $66 billion purchase of monsanto by the end of the quarter, transforming the company into the world's biggest producer of seeds. the ceo of a company says they do not support kanye west's controversial remarks suggesting slavery was a choice. west is a designer for the sports shoe company. ceo said the company is not discussed dropping him. the company has run into currency headwinds after lackluster u.s. revenue translating and fewer euros because of the dollar's weakness. that is your bloomberg business flash or david: the world of media is going over the top, and a critical -- on monday, akamai and outs first quarter earnings

which beat on revenue and earnings per share. the stock has traded higher. tom leighton is the ceo and cofounder. i have known you this for a long time. we used to use you to stream on abc news. the name is hawaiian. that means you are intelligent and clever. >> and hawaii are somebody -- in hawaii when somebody does some the cool, you say it is very akamai. david: results were encouraging. >> we have a constructive relationship with elliott management, pretty well aligned all our, as we do with major shareholders are it we value their input and have a frequent dialogue. david: where are you going next? what are you projecting in terms of growth, revenue, and margins? >> we are pleased with the first quarter revenue grew at 11%. 22%.m line eps grew as we look forward to q2 and the rest of the year, we see expanding margins, which is

great to see, and continued revenue growth led by our security solutions. up 36% year over year. very exciting. david: i think of you in terms of media, but you have a cybersecurity business. how big of a percentage is the security part? >> security is as of the a lot of people see. they see the sporting events online and the videos we do, but security is now almost a quarter of our revenue. it is growing at 36% year over year. in two years, it will be a bigger business maybe than even media. david: margins are pretty robust on the media site. how do they compare with the curate he? >> online -- long one, i think the security margins are even higher. cost to secure the video speared security is filtering out the bad traffic, stopping attacks. exciting technology to stop account takeovers. i was speaking with an executive one of the world's largest banks

a couple weeks ago, and they used to lose 8000 accounts a month because the bad guys took them over and took the money away with fraud. they are down to one or two. one or two. basically eliminated the count takeover that was happening online. david: on the media side and the growth, is that because the overall size is growing of streaming? how much of it is market share? >> we are gaining market share. our traffic is growing at a rate much higher than the market. more people are watching online. that helps. also, people are watching it higher quality levels. you do not think about it, but as you get a better quality picture, that takes a lot more bits per second of traffic to produce the picture. alix: how many people do you expect to hire this year? >> akamai is growing at we have over 7000 people. we could grow by several hundred more this year.

we're continuing as a growth company. alix: do you have to pay up for those workers? >> sure. alix: but how hard is it to find the workers? would you have to pay up more than you would have? that we fortunate in are really after the smartest people out there, and because of our employee base, they tend to attract those people. we're doing cool stuff, delivering was the media you see online. we are defending the world's major banks and commerce, and is against takeover and fraud. we're making the apps you use fast. david: so how many of those people will be programmers? >> the majority of the company is technically oriented. there is development, the technical support for customers, staying ahead of all the attacks. everything in technology requires a strong workforce.

are you one of the technology comedies that needs to have some people come over from outside of the united states? >> i think integration is important for the country. we are able to attract talent we need. .nd we hire overseas we run a global business, so we hire people that are smart and technology all around the globe it alix: what are your unit labor costs like? >> costs a fairly steady, maybe a little bit higher year over year, but that is to be expected to david prop so you are not seeing a lot of wage pressure. >> we are in a good position when it comes to hiring the talent we want. alix: what is your biggest concern? what keeps you up at night? >> it is an incredibly fast moving landscape. in terms of security, you have giant entities, nations, organized crimes, political hacktivism. they're motivated, and we have to stay ahead of them. it is execution and continuing developible a desk to

capabilities. staying ahead. alix: thank you very much, tom leighton, akamai ceo. coming up, the record rally in global prices could be coming to an end. blame elon musk. he stressed analysts and investors on the call and also those were long global rim of her, bloomberg users can interact with the charts we show .t the day on gtv this is bloomberg. ♪

>> we're emitted to open markets. -- we are committed to open markets. world-class. usually important. watching, elon musk hurting those who are long cobalt. what he said about tesla's cobalt use. we can get the cobalt used to almost nothing. nickel andally, buy

sell cobalt. in electric vehicles, you have lithium, cobalt, and nickel. the issue is that there is not enough supply, and cobalt in particular, the market is tighter prices are at around $100,000 a ton. lithium, you have until about 2025 before that market gets tight. that is about $20,000 a ton. if you find a substitute, that will do you a very well when you're trying to build these cars and ashley make cash flow and -- and actually make cash flow. david: they are going to make a lot of electric vehicles. alix: a lot of the companies are trying to secure that supply line or goingg into joint ventures with companies that have that kind of supply. cobalt, the more jake comes from the drc. so there -- the majority of it

comes from the drc, so there are ready supply constraints. this will be a big factor in what we're going to see from this car companies. david: are these usually traded on long-term contracts, and how long? alix: i actually do not know the answer to that. the problem is that a cobalt mine is a byproduct. it is a different kind of scenario. out alle will find about this. alix: we will talk about it at 1:00 on bloomberg's "commodities edge." the market open is up next. jon ferro will be joined by the citigroup head of u.s. economics. this is bloomberg. ♪

+ -- >> this is the countdown to the open. ♪

>> coming up, china. the president's men arriving in beijing. taking on wall street. seemingly doing more damage to the stock. a setback potentially. unexpectedly dropping to the weakest level in more than a year. 30 minutes away from the opening. futures in the low. the fx market, the dollar weaker. euro-dollar pushing back up towards 120. despite the weak inflation. treasury grinds lower. the main event, the president in beijingm arriving